DMA: Do-Not-E-Mail Registry Would Cost Industry $5.8B

The proposed federal do-not-e-mail registry would cost the commercial e-mail industry as much as $5.8 billion, according to a study released March 31 by the Direct Marketing Association.

The cost estimates were included in comments the DMA submitted to the Federal Trade Commission, which in March requested comment on the do-not-e-mail registry proposed as part of the CAN-SPAM Act. The FTC must submit a plan to Congress for its implementation, along with potential drawbacks and costs, by June 16.

The FTC is on record opposing such a list, modeled after the popular no-call registry, saying it would do little to stop spam.

The study, prepared by Peter Johnson, the DMA's top economist, estimated that a do-not-e-mail list would cost businesses $5.8 billion from lost sales and increased customer acquisition costs. It based its estimates on DMA projections that U.S. consumers spent $33 billion in response to commercial e-mail from November 2002 to November 2003.

In its written comments to the FTC, the DMA said the registry would not work. "A do-not-e-mail registry would create significant privacy and security risks for consumers, while at the same time creating unrealistic expectations that by signing onto the registry consumers will not receive spam," the DMA said.

The DMA's negative comments on the registry were supported in a letter submitted March 31 by 21 trade groups, including the Association of National Advertisers, the American Association of Advertising Agencies and the U.S. Chamber of Commerce. The letter states that a do-not-e-mail list would put onerous burdens on legitimate commercial e-mailers.

The DMA projects a list would block 21.3 billion legitimate messages and no spam messages, defined by the DMA as e-mail sent by fraudulent means.

Most of the $5.8 billion in lost revenue would be borne by small businesses, the DMA asserts, which use e-mail for customer acquisition and retention. The DMA estimates small businesses, as defined by respondents, would lose $4 billion in revenue from a do-not-e-mail list.

DMA research indicates that small enterprises spend 21 percent of their Internet marketing budget on e-mail versus 6 percent for midsized businesses and 14 percent for large.

The DMA has trumpeted unsolicited commercial e-mail as an economic engine, fiercely opposing legislative attempts to curtail it. In a study released in February, the DMA estimated U.S. consumers spent $11.7 billion annually on products and services pitched in unsolicited e-mail.

The DMA study did not indicate how much of the costs of a do-not-e-mail registry would fall on permission-based e-mailers. In its February study, it estimated that permission-based commercial e-mail accounts for 64 percent of e-mail-generated sales.

Al DiGuido, chief executive of e-mail service provider Bigfoot Interactive, who opposes the registry, said its real danger was in failing to live up to unrealistic consumer expectations that it would cut down on spam.

"It wouldn't have a dramatic effect on our business," he said. "The way we work with marketers is helping them build better relationships with their customers."

Using the national no-call list as a guide, the DMA projects about half of all consumers, or 115 million, would sign up for a do-not-e-mail registry. The number would be higher if Internet service providers were allowed to put all their members on the list.

The DMA also cast a skeptical eye on studies showing widespread support for this kind of registry. A poll last July commissioned by ePrivacy Group showed 74 percent of consumers support such a list. The DMA's own survey of 1,000 consumers conducted in March showed that just 37 percent favored a do-not-e-mail list that did not stop pornographic and fraudulent spam but did stop legitimate commercial e-mail.